The demographics of Um?

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I meant to blog about the Centre for Um discussion paper on demographic change by Alasdair Murray a couple of months ago, but I ended up getting distracted. As part of my general post-holiday catch-up, I thought I’d get my comments off my chest now, but as it was a while since I read the paper, I’m a little rusty.

On specifics, I don’t quibble with a lot of what the paper is saying. It is surely correct to point out the problems of simplistically emphasising how the aging population will lead to more elderly dependents on the economy without looking at how other dependents (the young, the economically inactive) effect the economy at the same time. I don’t think any liberals question the need to scrap the fixed retirement age of 65 (socialists are another matter – I seem to recall Labour activists queuing up to denounce this at their last autumn conference). I agree also with the need to bring more young people into the labour market – a stark contrast with Labour’s obsession with giving 50% of the population a (potentially worthless) university degree and raising the school leaving age to 18. There certainly should be an emphasis on skilling young people, but that should be done in the workplace, not in pseudo-universities (on which point, can I recommend Geoffrey Wheatcroft‘s article on the subject last week: “Those who insist that expanding higher education is virtuous in itself never stop to say why this should be so. And they never explain why it should be better to be a third-rate media studies graduate than a first-rate carpenter.”).

It is the wider arguments of the paper that trouble me. First of all, the bland claim that “pessimistic predictions about Europe’s demographic future overstate the problem in most countries and ignore the potential to adapt.” That is half true, but how are we to adapt if we ignore the pessimistic predictions? Alasdair Murray points out that a number of countries have already dealt with the “pensions time bomb” in their policies, but this has to be at least partially because of the scare reports that have been dribbling out over the past 20 years and more. This doesn’t prove them wrong: it proves their worth.

More irritatingly, I can’t go along with his bald assertion that inter-generational conflict isn’t worth bothering with. He bases this on two lines of argument: that there is little evidence of an emerging conflict, and that young people are better educated, richer and have higher rates of employment than their parents.

The first argument is just plain daft; it’s the Nelson defence (“I see no ships”). To start with, it depends where you look and what you’re looking at. What’s more, the fact that there is little tension now is not to say that there won’t be tension in the future.

The second argument misses the point that it isn’t incomes that we are quibbling about, but assets. Those subsidised right-to-buy homes people bought in the 80s simply do not exist. Greater earning potential is one thing, but if the economy drives people into habitual debt – thousands just to get “credit rating”, tens of thousands on graduation, hundreds of thousands of mortgage debt – that leaves very little at the end to build a nest egg. I’ll come onto the underlying assumption in the paper that population growth is an unalloyed good in a moment, but assuming that is the case for a moment, it is surprising that he appears to have missed the growing evidence that one of the main reasons that people are starting families later in life now is because they struggle to afford the housing; indeed housing is barely mentioned either in the paper as a whole, or in the section on inter-generational conflict.

Worst of all, he parrots that old canard about wealth cascading down the generations. I’ve lost count of the number of times I’ve said this: that’s the problem. Because people don’t, as a general rule, spread their wealth evenly to the younger generation: unsurprisingly they favour their children. This entrenches privilege, deepens the divide between rich and poor and, by putting wealth in the hands of ever fewer families and individuals, is a potentially catastrophic cause of social immobility. No-one is questioning that the millionaire couple who profited from the buy-to-let boom will eventually hand their assets over to their children; what we’re questioning is whether they should be the beneficiaries and what economic impact it will have further down the line.

The biggest single omission however is that this paper does not mention the environment, climate change and the management of natural resources. At all. I’m amazed that you can even write a paper on demographics without mentioning these things. A dry debate about immigration is one thing, but what do we do if Bangladesh goes underwater and Africa becomes an arid dustbowl? Where do the people go? What if they decide to come here? Cheery forecasts about pensions is one thing, but what about peak oil? Europe’s stagnating population is one thing, but global population is expected to reach 9 billion by 2050 (it seems like only yesterday when we reached the 6 bn mark – now we’re at 6.6 bn).

You may argue that all these big questions go beyond a simple paper on the economics of European demographics; I accept that they would have lead to a substantially different paper. What I do seriously question however is how the paper can assume that population growth is a good thing that policy makers should aim for. The paper does not oppose pro-natal policies, just the practicalities of the more crude of these (such as Germany’s tax system). Instead, it recommends policies that “best create the conditions where fertility rates might rise by removing structural obstacles to female labour market participation”.

I’m not in favour of radical anti-natal policies such as China’s one child policy, let alone anything more draconian. Nor do I believe in putting obstacles in the way of “female labour market participation” with a view to reducing fertility rates. I do however feel that population growth and environmental sustainability are heading for a full on collision, that one will have to give way to the other and that if the species is to survive in the long term, it had better be the latter. How do we develop genuinely liberal anti-natal policies? And if those policies are successful, won’t they exacerbate the problems associated with an aging population (if fertility rates dropped significantly, the average age would increase quite rapidly)?

In short, while he has some good points, Alasdair Murray’s pamphlet is exactly the wrong paper at the wrong time. It sets out to deal with a problem which, from the outset, it asserts has already been solved, and fails to answer the important questions relating to demographics that we need to be answering in the 21st century.

3 thoughts on “The demographics of Um?

  1. James,
    Thanks for this thoughtful review. Natually, I will not agree with all of it but thought I might just make a few rejoinders to consider.

    First, I stand by my point about trying to counter the excessively ‘pessimistic predictions’ of many analysts and politicians in the field. The pamphlet contains plenty of evidence of vastly over the top analyses of the problem, which will invariably lead to bad and illiberal policy. Having followed the debate for a number of years at the European level, I was concerned at some of the simplistic assumptions which were creeping into policy across the continent.

    On inter-generational conflict, my aim was really again to tackle some of the absurd hyperbole (Reforms piece on the IPOD generation, for example) on the issue not to deny there are any issues of intergenerational equity to consider. On the specific point about house prices “acting as a contraceptive” (to misquote David Willetts), I would agree that you would expect some link, but the evidence is that it is not very linear. Put simply, the birth rate has ticked up steadily since 2000 even though prices are going through their biggest ever boom. But I accept that I probably overstated the case and this is an area I would like to take a more detailed look at in the future. In my defence it was not meant to a be a key point of the pamphlet.

    On the underlying theme of the book – that population growth is a good – I think you misinterpret its message. Much of the pamphlet is devoted to explaining why we can live very happily with population stagnation or even steady decline in Europe. But I do not, pace the optimum population trust, believe we should be attempting to introduce government policies designed to halve our populations. I actually believe that the current birth rates in Europe are a very rational response to prosperity and social freedoms which governments should not be seeking to undermine with policies which either stimulate or curb fertility rates. However, where this is clear evidence that structural policies are forcing women to choose between children and employment – as is the case in some European countries, there are good liberal, economic efficiency and social justice reasons for ending the anomalies. My analysis suggests that any increase in fertility rates would be marginal at best.

    As you say, the issue of population growth elsewhere in the world is a matter for another pamphlet. You may regard this as a far more important problem, but this does not mean the European demographic debate is redundant. Certainly the EU regards demographic change, alongside globalisation, climate change and terrorism as one of the main challenges facing Europe in the 21st century. That was my cue for writing.

    Alasdair

  2. Thanks for your response Alasdair. But you didn’t answer my main charge (which I perhaps should have made more explicit): that the pamphlet does not address the demographic implications of environmental change over the next few decades, despite the widespread consensus that climate change is now upon us. The possibility of the bulk of Bangladesh going underwater and massive desertification of Africa isn’t science fiction.

    Even leaving those effects to one side, I also don’t think you can divorce European demographic change from global demographic change: we already have economic migration as a direct result of that, and that will surely have a huge impact in a world with 9 bn + people. The paper discusses immigration as a prospective “solution” to Europe’s so-called demographic time bomb, but not as a powerful force that we have to understand and prepare for.

    I’m gratified by your response regarding intergenerational equity however, and I certainly agree that many models in this field can be hopelessly simplistic.

  3. James,
    I would treat this as a related but different question – you are talking about environmental change accelerating population movements. This phenomenon and the policy prescriptions that would follow are very different to the debate I covered. I could not do them justice in a short pamphlet like this with a specific political/policy context as previously discussed.

    Similarly, my discussion on immigration, which is of course worth a whole book on its own, was deliberately liimited to exploring why it is not a ‘solution’ to an ageing society as this is a key argument within the discussion about European demography. It was designed to maintain focus rather than be a definitive answer to all immigration/population flow matters.

    Anyway, I hope to do further work in the population politics debate and look forward to reading your thoughts on the subject,
    Alasdair

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